The Impact of Privacy Laws on Online User Behavior

82 Pages Posted: 16 Mar 2021 Last revised: 17 Nov 2022

See all articles by Julia Schmitt

Julia Schmitt

Goethe University Frankfurt

Klaus M. Miller

HEC Paris

Bernd Skiera

Goethe University Frankfurt

Date Written: October 1, 2021

Abstract

Policymakers worldwide draft privacy laws that require trading-off between safeguarding consumer privacy and preventing economic loss to companies that use consumer data. However, little empirical knowledge exists as to how privacy laws affect companies’ performance. Accordingly, this paper empirically quantifies the effects of the enforcement of the EU’s General Data Protection Regulation (GDPR) on online user behavior over time, analyzing data from 6,286 websites spanning 24 industries during the 10 months before and 18 months after the GDPR’s enforcement in 2018. A panel differences estimator, with a synthetic control group approach, isolates the short- and long-term effects of the GDPR on user behavior. The results show that, on average, the GDPR’s effects on user quantity and usage intensity are negative; e.g., the numbers of total visits to a website decrease by 4.9% and 10% due to GDPR in respectively the short- and long-term. These effects could translate into average revenue losses of $7 million for e-commerce websites and almost $2.5 million for ad-based websites 18 months after GDPR. The GDPR’s effects vary across websites, with some industries even benefiting from it; moreover, more-popular websites suffer less, suggesting that the GDPR increased market concentration.

Keywords: Privacy Law, Online Privacy, Consumer Protection, GDPR, Data Privacy Regulation

Suggested Citation

Schmitt, Julia and Miller, Klaus and Skiera, Bernd, The Impact of Privacy Laws on Online User Behavior (October 1, 2021). HEC Paris Research Paper No MKG-2021-1437 , Available at SSRN: https://ssrn.com/abstract=3774110 or http://dx.doi.org/10.2139/ssrn.3774110

Julia Schmitt (Contact Author)

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Klaus Miller

HEC Paris ( email )

Paris
France

Bernd Skiera

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 4
Frankfurt, 60323
Germany
+49 69 798 34640 (Phone)
+49 69 798 35001 (Fax)

HOME PAGE: http://www.skiera.de

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
314
Abstract Views
2,298
Rank
180,560
PlumX Metrics